SAP Ariba Case Study – U.S. Retail Chain Saves 20% on Contract Renewal
Background
A nationwide retail chain in the United States, operating hundreds of stores, was using SAP Ariba to streamline its procurement and supplier management.
The company depended on Ariba for everything from sourcing products to managing supplier contracts and purchase orders.
As the retailer’s use of Ariba expanded, the costs escalated. They were approaching a major contract renewal for Ariba and planned to add new modules (such as Ariba Supply Chain Collaboration).
However, initial pricing from SAP for the renewal and expansion was steep. The procurement department, responsible for the Ariba platform, was under pressure to control costs while enabling the new capabilities.
Challenges
The retail chain faced several challenges in this SAP cloud product negotiation:
- Rising Subscription Costs: The Ariba subscription fees had grown year-over-year as transaction volumes increased. The renewal quote included a 20% price hike, plus additional fees for the new modules and higher transaction tiers, which far exceeded the budget allocation.
- Supplier Network Fees: On top of subscription costs, SAP charges fees for Ariba’s supplier network usage. With thousands of suppliers interacting through the system, those network fees were substantial. The retailer felt these costs were not transparent and wanted to cap or reduce them.
- Module Bundling: SAP’s proposal bundled Ariba modules in a way that forced the purchase of packages that included features the retailer didn’t need. For instance, the quote bundled SAP Ariba Spend Analysis with the desired procurement modules, even though the company used a different analytics tool.
- Alternative Solutions: Internally, the IT and procurement teams had identified that if SAP wouldn’t budge, they could consider rival procurement solutions (like Coupa) or even revert to the ERP’s built-in purchasing features. This leverage needed to be communicated delicately to SAP.
Solution (How SAP Licensing Experts Helped)
- Usage and Spend Analysis: SAP Licensing Experts reviewed the retailer’s Ariba usage data. They analyzed transaction volumes, supplier counts, and module utilization. This revealed that the retailer was operating well below the limits of their current subscription in some areas, meaning they had bargaining room (e.g., they hadn’t come close to the maximum number of documents or spend value in their tier).
- Requirements Reassessment: The team helped the retailer refine its true requirements for the renewal. Some planned Ariba modules turned out to be “nice-to-have” rather than essential. By prioritizing core needs, the retailer could drop certain add-ons from the deal. For example, they postponed Ariba Spend Analysis and another optional module, focusing negotiation only on what delivered immediate value.
- Competitive Benchmark & Leverage: The experts prepared a comparison of the total cost of ownership between continuing with Ariba and switching to an alternative procurement platform. Although switching would be disruptive, showing SAP that the retailer had done the math on a potential move created leverage. Additionally, they knew SAP wouldn’t want to lose a marquee retail customer to a competitor. This was used to push for better terms.
- Negotiating Supplier Fees: A crucial win was convincing SAP to adjust the Ariba supplier network fees. SAP Licensing Experts negotiated a cap on network fees, ensuring the retailer wouldn’t pay more than a fixed amount annually, even if their supplier count grew. They also secured a volume discount: as transaction counts increased, the per-transaction cost would decrease, protecting the retailer from runaway costs.
- Multi-Year Discount Structure: The negotiation introduced a 3-year contract with fixed annual pricing (no yearly escalation). In exchange for the retailer’s commitment to Ariba for three years, SAP provided an upfront discount that effectively reduced the overall cost by around 20%. This multi-year SAP contract negotiation approach locked in savings and budget predictability.
Outcome and Savings
The outcome was a restructured Ariba agreement that delivered approximately 20% in contract savings compared to SAP’s initial renewal offer.
By eliminating unnecessary components and securing better unit pricing, the retail chain saved close to seven figures over the term of the deal. Equally important, the procurement team gained predictability: with capped fees and fixed pricing, they could forecast costs without fear of surprises as the business grew.
The retailer proceeded to expand its use of Ariba, confident that the cost was under control. The new modules were rolled out on schedule, and supplier adoption increase,d knowing that the platform’s costs were now sustainable. This case underlined that even in SaaS renewals, a savvy negotiation can yield significant savings.
“We knew we had leverage as a long-time SAP customer, but SAP Licensing Experts really maximized it. They helped us cut our Ariba costs by a fifth and structure the deal so we’re not penalized for growing our supplier base. It was a huge win for our procurement strategy and the bottom line,” — Procurement Lead, U.S. Retail Company
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